Q1 2025 U.S. office market overview

The overall availability rate for U.S. office space sat at 23.3% in the first quarter of the year, comprised of a 20% direct availability rate and 3.3% sublet availability rate. The first quarter was the third consecutive quarterly decline in overall availability—a trend not seen since before the pandemic in Q4 2018.

Quarter-over-quarter, direct available space decreased by 1.1 million square feet (msf) and sublet available space decreased by 11 msf, netting a 12.1 msf decrease in total available space. While the availability rate remained historically high, this quarterly decrease in supply is a positive indicator for the U.S. office market.

U.S. office leasing activity in Q1 2025 reached 66.4 msf—sitting 17.4% behind the pre-COVID average (2000-2019) at 80.4 msf and 18.4% behind Q1 2024 at 81.3 msf.

Certain markets like San Francisco and Manhattan are up significantly from Q1 2024 (41% and 21%, respectively), while others like Boston and Los Angeles have fallen (-50% and -38%, respectively).

Lending activity is showing signs of renewed strength in select gateway markets, particularly New York City, where early indicators point to a gradual recovery in office fundamentals.

Momentum is building in 2025, with Q1 alone seeing approximately $15.7 billion in office loan originations. Notably, six loans already surpassed the $500 million mark, with four exceeding $1 billion—a sharp contrast to 2024, which saw just four loans over $500 million and none above $1 billion.

This uptick in large-scale financing suggests growing lender confidence in stabilized, high-quality assets within recovering urban cores.